Celebrities advised against campaigning for 'irresponsible' loan agencies

There are a few things that borrowers need to know about high interest loans

08:22 10 July 2013

Some high profile celebrities are being criticized of late by debt counselling experts for indiscriminately doing advertisements for loan firms offering irresponsibly high-interest loans. 

It is feared that these lenders are taking advantage of the popularity of certain TV programmes and celebrities to advertise their loans with excessive interest rates.

Debt advisors are calling upon these celebrities to be more cautious in accepting endorsement projects that aim to promote unseemly loans guised as hassle-free short-term loans, but in reality a sure path to financial nightmare.

Often, the ease and speed of cash acquisition presented by payday loans can make them look like the most likely solution to one’s financial emergencies. For people living paycheck to paycheck, payday loans or short-term loans have become a permanent solution for some of these people in order for them to meet monthly bill payments.

Generally, the beleaguered borrower does not have the luxury of time or perhaps right information to scrutinize the fine print of the loan terms and conditions or to even realize how much total interest charges amount to.

As the borrower is caught in the vicious cycle of borrowing and paying and borrowing again, it may only be a matter of time before this individual sinks deeper into debt - as he/she may no longer be able to pay the loan on time and have to roll over the terms of payment a number of times.

 

Consumer groups have always warned borrowers against taking up loans bearing more than 36per cent interest.

Given the above realities, some loans present more disadvantages than benefits and should only be availed by people who are extremely in need of fast cash, and who have a stable means of income to make payments possible.